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Fewer Rewards for Debit Card Holders

By Danielle Belopotosky June 17, 2011 2:28 pmJune 17, 2011 2:28 pm

David J. Phillip/Associated Press

Change is in the air for rewards programs linked to debit cards, like those that let users bank airline miles with each purchase. For the 8 or so million Chase Continental debit card holders, this will mean no more miles.

Last year, when Congress enacted the regulatory financial reform law, an amendment by Senator Richard Durbin, Democrat of Illinois, effectively put many debit-card rewards programs on death row. The amendment, which deals with interchange fees charged to merchants each time a customer swipes a debit card, sets new limits on those transaction fees. Those fees, based on the purchase amount, have averaged about 44 cents per transaction, according to a Chase spokesman. In response to the estimated loss of billions of dollars in revenue, some banks like Chase, SunTrust and Wells Fargo decided to drop or curtail their programs. The Durbin Amendment goes into effect on July 21, but many of these programs will end before then.

Chase Bank, for example, decided to drop its rewards program for its debit card linked to Continental Airlines. Debit card holders earn 1 mile for every $2 spent on the card — but only until July 12, when the program ends. Bank of America has not made any changes to its rewards programs linked to US Airways or Alaska Airlines, a spokeswoman said. While SunTrust has ended some of its rewards programs, it still offers its Delta SkyMiles Check Card.

What does this mean for Chase debit card holders? Any miles that were earned will continue to be held in Continental OnePass rewards accounts. Chase won’t issue new debit cards for rewards cardholders, which means there are no changes to the PIN, bill payments or how the card is used, according to Chase.

For Chase customers who qualify, the Chase Continental Credit Card will continue, but the rules and annual fees vary. Under this program, credit card holders earn 1 mile per every $1 spent.